Internet Leads are WORTHLESS!!!

As the owner of a Colorado real estate company, I end up "talking shop" quite often with other Realtors®, and conversation inevitably ends up around our online business model and how our agents depend almost entirely on internet leads for getting new business. No cold calls. No farming. No open houses. Just internet leads. In response, the Realtors® I'm talking with usually say "How can you do that? I've always found internet leads to be worthless and a big waste of time." The funny thing is -- I partly agree with that statement. At face value, an internet lead not properly followed up withispractically worthless. Proper followup, however, makes all the difference in the world and can change your odds of closing an internet lead from about one tenth of a percent -- to 5%, 10%, or even higher.

We've studied tens of thousands of internet leads. Automated Homefinder has generated tens of thousands of internet inquiries in the 12 years since our inception, and we've learned a lot from our successful closings with many of those leads. We've learned even more from those who don't buy through our agents. The biggest lesson: Within the first six months of signing up, approximately 40% of the people who unsubscribe are doing so because they bought a home, or are under contract to buy a home. Let's not forget that this statistic excludes those who bought a home through one of our agents!

In other words -- when you get an internet lead, you have well over a 40% chance that they're going to buy a home within 6 months. Knowing that a prospect who signed up on the internet has well over a 40% chance of closing within 6 months of them signing up with you, does that change your motivations about how to treat that lead? If so, Your job is simple: You just have to convince them to buy a home through you vs. one of your competitors. The best way to get them to buy through you? Follow up with them early and often.

An interesting statistic from another internet company: I was at the 2008 NAR conference just last week, and I heard an interesting statistic from J. Lennox Scott - CEO of John L. Scott Realty. He said that you are 21 times more likely to close an internet lead if you call them within 30 minutes of their inquiry -- and 100 times more likely if you call within 5 minutes! At first, this seemed like a bit of an exaggeration, but the more I thought about it, the difference between our producers who sell $10 to $12 million in sales per year, and our agents who close only $2 or $3 million with similar volumes of leads comes down to one thing: Our $10 to $12 million a year producers follow up with new leads as soon as feasibly possible. I was once at lunch with one of our top producing agents, and he called two of his internet leads right then and there while we were at lunch. Since he was at lunch with me, he told them he was at an appointment, but wanted to call just to introduce himeself, and that he'd call them back to see what they think of the houses he sent a bit later.

You might be thinking "How in the world can I be expected to follow up so quickly with internet inquiries without being tethered to my computer all day?" The solution is simple: Whether you have an IDX solution with an opt-in, a direct response system (free reports, home valuation requests, etc), or something else, odds are that you are able to get an email alert whenever you get a new lead. If you can get an email, you can get a text message. If you can get a text message, you can call your new leads -- ALL of your new leads -- within minutes of them signing up.

To get an instant text message as soon as a lead signs up, all you have to do is find out what your carrier's email extension is. Once you know your "email to text" email address, all you have to do is enter that email address in your prospect alert system. For example, if you are with Verizon and your cell phone number is (555) 555-1212, your email address is 5555551212@vtext.com Here are some of the email-to-text addresses for the major cell phone carriers:

Verizon: 10digitnumber@vtext.com

AT&T: 10digitnumber@txt.att.net

T-Mobile: 10digitnumber@tmomail.net

Virgin Mobile: 10digitnumber@vmobl.com

Voicestream: 10digitnumber@voicestream.net

Sprint: 10digitnumber@messaging.sprintpcs.com

Nextel: 10digitnumber@messaging.nextel.com

Alltel: 10digitnumber@message.alltel.com

In summary, if you've been in the camp of "Internet leads are worthless", and are letting those leads sit dormantly in your database because you don't want to waste any time on them, try calling them within minutes of them signing up & see what happens. If they don't answer, hang up and try calling from a different phone. I'd be willing to bet dollars to donuts that if you simply make an effort to call them ASAP, you'll see a drastic improvement in your conversion rates.

Interesting points John. I'll admit that it's hard to generalize on the best way to follow up with a lead - no matter what medium it came from.

In our case, phone numbers are optional, so we assume that people expect to be called, and from my experience, when I catch them while still on our site, it can only help because we're able to give them a personal tour of how to have the best experience using our site. (That also decreases the odds of them signing up with additional competitors - some of whom might have the same philosophy about diligent follow up ;-).

I'm sure it would be different if phone numbers were mandatory, and "proceeding with caution" might be the better protocol.

Hi Joel. Great post! I've generated hundreds upon hundreds of internet leads over the past year and my experences have been consistent with what you've said here. I have learned the hard way that to let a lead sit for even a day considerably lowers my odds of conversion. It's become a matter of discipline to follow up while the leads are hot; and I'm sad to say that my discipline has been very inconsistant in this area. I'm going to take your advice and implement a text messaging system to notify me of new leads.

Thanks Perfect Timing, but this post wasn't about getting traffic, or conversion rates of your existing traffic. It was about converting your existing leads after they already visited your site and opted to give you their contact info.

Whether you get 25 leads a month or 2500 -- the principle is the same: Contact them as soon as possible, and your odds of converting them will drastically increase.

Good point Joel...People are on the Internet, because they not necessarily the print buyer or seller. They want rapid-fire feedback. I agree- following up quickly makes a big difference in converting the Internet lead or not.

In other words -- when you get an internet lead, you have well over a 40% chance that they're going to buy a home within 6 months.

Good morning Joel,

Thanks for the great study! I appreciate your reminder about FAST response. This is actually the second time I've heard over 40% of internet leads will buy. I'm going to share this information with all my clients.

Before I became an agent, and one could argue why I became an agent, I never had a call back in less than a day when I made a request online. I had gotten a few auto-responders within minutes and I got one phone call the next day. but usually I NEVER got contacted. I think with cell phones, text messaging, Blackberry's and iPhones this is just unacceptable. If you are working with Gen-X or Gen-Y buyers and sellers it will mean you won't be working with them.

I think that the Realtor population has lot of people over the age of 50 and many of them don't see the urgency and sadly they will adapt or their business will perish.

Thanks for the comment Greg. Actually, my point is that internet leads are only of low value if you treat them that way. However, if you make a priority of following up with them, they are FANTASTIC. Our agents sold over $200 million in sales last year from internet leads alone.

I agree that the internet shopper wants information fast! But either through an email or by phone I let them know that their privacy is very important to me and I would be happy to answer any questions they may have. I've been able to build real relationships leading to closings from the internet.

Disclaimer: ActiveRain, Inc. does not necessarily endorse the real estate agents, loan officers and brokers listed on this site.
These real estate profiles, blogs and blog entries are provided here as a courtesy to our visitors to help them
make an informed decision when buying or selling a house. ActiveRain, Inc. takes no responsibility for the content in these profiles,
that are written by the members of this community.